The dizzying eworld of 2013

Kid Developer

Leading WA ebusinesses may have been around awhile, but this disguises how the nature of the sector has radically changed

Mark Pownall’s piece “Renewal Challenge for local online leaders” (15th July 2013) was in response to Business News’ first list of WA online businesses. Mark noted that most of the businesses were over ten years old (an age in the fast moving and competitive tech industry), and that few had managed to make it big anywhere but Perth. Indeed, most budding entrepreneurs that had made it big (think Steven Goh’s Mig33) had had to leave Perth for the lure of Silicon Valley, where big thinkers with big money back big ideas.

There is certainly a case to be made for this.

Online businesses in WA started appearing in the mid 1990s, with perhaps Clay Cook’s iNeedHits.com being among the first in 1995. Many others followed, all allured by the promise of the new millennium and the e-revolution. No one was interested in boring, profitable mining stocks back then.

It is of course a self-fulfilling argument that those that survived those early years and are still around today are fairly old ‘in dotcom years’. As the online community jokes, a ‘dotcom year’ is much like a ‘dog year’, equivalent to seven of a human one. 10 dotcom years is an age.

Those online businesses that had no business to be in business quickly fell by the wayside, along with all the other ‘dotbombs’. Those that went offshore are no longer here. Some have been successfully sold and merged into other entities. Some simply dissolved into nothing. Those that are still around are, well, still around.

For those that have had made it through, an early start was certainly helpful. Pioneering something, and giving yourself the often lauded ‘first mover advantage’ can allow you to pick up the low hanging fruit in a new market. It can also give you time to make mistakes, recover and learn what works.

However, it can also be a very expensive time, as the cost of learning is high while you are feeling your way in the dark trying persuade customers to change their spending habits. Imagine trying to convince real estate agents to pay for online advertising back in 1999. They mainly put their money in a wheel barrow and carted it off to the weekend newspaper real estate sections back then. Today, those sections seem slimmer than ever.

So you can certainly go bankrupt if you enter a market too soon, and if you enter too late, well the cost of entry can become prohibitive.

Geographical isolation and Perth’s smallness (both in terms of consumers and capital) certainly protected the online businesses in their formative years. But these same factors also limited their growth potential.

As these businesses slowly took hold and profits came, new entrants found it harder to knock these guys off their perch. The power of incumbency was with them and the ‘local pie’ was fairly limited in size and scope.

Overall though, I believe there is another reason why the major WA online businesses are all averaging over a decade old. In the last few years, a new form of ebusiness has emerged and exists in a parallel universe.

Wander down to the coworking facilities of SpaceCubed in the city, or to Sync Labs in Leederville and you catch a glimpse of them. Single person entrepreneurs are plying their trades online with no more than a laptop and a WIFI connection. Armed with an idea and a determination to exploit a new opportunity, some of these start-ups are doing amazing things, earning good money and flying totally under the radar.

If a 17 year old ex-Perth schoolboy can sell the app he created in his London bedroom for a reported £18 million (A$30 million) in March this year, then, well why oh why can’t I?

Instagram was bought for $1 billion by Facebook in 2012, one year after its foundation. It had little revenue, a handful of staff and millions of users. Just an app on your phone.

None of these businesses are going to make any online business list as ranked by Alexa’s traffic count. They are plying their trade on the App stores of your nearest mobile device.

These businesses, such as they are, last for a few months. They either make it big and are bought up quick, or pivot into something else. They come and go quicker than an Ashes batting line up. Turn your head for a moment, and several new ones are vying for your limited attention.

Welcome to the brave new dizzying world of ebusiness, 2013.

Photo Credit: GizModo/Shutterstock

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